INTRODUCTION
It is the title that is determined first when starting each article, each book. Because determining the title is like taking aim. If you do not set the target, the arrow and bow in your hand have no value. The weapon is not actually a bow and arrow. A gun becomes a gun with the one who uses the gun. If you set the heading correctly, the arrow goes to the target. If you have started the article without determining the title, you will have to rewrite that article. Because you missed the target, you did nothing.
There were also title options when starting this article:
- The reign of the dollar is destroyed.
- The reign of the dollar is collapsing.
- The reign of the dollar was destroyed.
- The US extortion system is collapsing.
- The dollar becomes a paper tiger.
- The end of the paper tiger.
- The rise and fall of the dollar reign.
All these titles have a meaning in the process of the collapse of the dollar. However, if we do not understand the process of the rise of the dollar reign, we cannot explain its collapse either.
On May 5, 2020, we wrote in our ‘Rota” column in Aydınlık newspaper with the headline “Dollar Reign is Collapsing”. In the words of our friend Hakan Topkurulu, “Things got messy. As if their own reign had been collapsed!” it was.[1]
There is a world order that has collapsed with the destruction of the reign of the dollar. There are those who find life in that order, those who cling to and hold to that order, those who have ideological and political connections with that order. For them, the collapse of the dollar reign is like the breaking of the apocalypse. It is the end of the world! Thus, the destruction of every order is a destruction not only for the owners of that order, but also for its servants. Ideological servitude is also a kind of servitude.
When we say “the reign of the dollar is collapsing,” we are not expressing a desire, a hope, a dream, we are making a determination. Like every natural and social being, the dollar has youth and aging ages. The dollar reign is being destroyed, because the ground on which the reign was founded is being destroyed.
For the last 60 years, we have fought against the US imperialism, we have taken actions against the reign of the dollar, but we have never written “the reign of the dollar is collapsing”. Now we are resolutely engraving on the stones: the reign of the dollar is collapsing. Because this event is the event of present day.
Our guide is science, in other words, we are trying to understand and explain concrete processes. The collapse of the dollar reign is a new event, today’s event. We are also making this determination today based on the facts.
The examination material of science is the concrete processes. Those who cannot see today whether it is destroyed or not will see tomorrow. Although they do not see it, the reign of the dollar is collapsing! A number of scholars in China were discussing “whether the river overflows or not” in the emperor’s palace. The river raided the palace and they understood the answer to the question.
All of our data is scientific. We are based on facts, material processes, and numbers. It used to be called reasoning, nowadays those who know and those who do not know keep saying “argument”, and our use of our beautiful Turkish for reasoning is also scientific.
Most importantly, we have been in the struggle against the reign of the dollar for 60 years. Those who saw the collapse of the dollar reign before anyone else are the ones who are fighting against the dollar reign. Those who destroy all the sultanates in the world see the collapse of the sultanate before those who watch it. The result of the war is seen on the battle front before anyone else.
I. THE DESTROYED FOUNDATION: ECONOMIC SUPERIORITY
I.I. The economic superiority of the United States after the World War II
The reign of the dollar was established after the World War II.
The strongest economy in the world after the war was the US economy. The USA was producing half of the world’s production at that time. The largest armed force in the world was again the armed forces of the United States. The United States established the reign of the dollar based on its economic power and armed might.
The enactment of the dollar rule into law was made with the Bretton Woods Conference in July 1944. The United Nations Monetary and Financial Conference was convened in the town of Bretton Woods in the US state of New Hampshire and an agreement called the “International Monetary Agreement” was signed. With the participation of 44 countries other than the socialist countries, especially the Soviet Union, a fixed exchange rate basis was adopted for the country’s currencies. Each country that signed the agreement has linked the value of its money to the dollar basis. The World Bank and the IMF (International Monetary Fund), founded at the Bretton Woods Conference in 1946, began operating.
We have been carefully monitoring the weight of the United States in the world economy and its share in the economies of major countries for 50 years. We are also monitoring the armed power of the United States and competing military forces. In the article titled “Towards a Multipolar World” published in the Saçak magazine in 1987, in the book titled From Stalin to Gorbachev, first published in 1990, we considered the shares of the United States and other major countries in the world economy and the balance of forces between the armed forces and evaluated the upcoming process.[2]
The USA was the only major state that survived the World War II unscathed. In fact, she had come out of the war with great profits and gained a favourable position for world domination. Thanks to its strong economy, it was not only the leader of the capitalist world, but also the number one state in terms of military. In addition, in the face of the outdated colonialism of England and France, she also had a slogan such as “Free World”. Thus, she was also entering the areas of her tired allies and expanding her dominance.
The Soviet Union, although, was one of the victors of the World War II. But the country had suffered a great destruction. If the total power and influence of the Soviet Union are taken into account, it was the second largest country after the United States. However, the Soviet economy was far behind the US economy. Soviet statistics indicated that in the Soviet Union in 1950, national income was barely 30 percent of the United States, and industrial production was 31 percent of the United States.
The military power of the Soviet Union was also far behind the United States at that time. Although the number of its soldiers was not less than the United States, its weapons and equipment were too far back to be compared with the United States. The naval and air forces could not cope with the USA both in quantitative and qualitative terms. Its strategic nuclear power, on the other hand, was non-existent, then weak at the beginning.
England, France, Germany, Italy and Japan, on the other hand, were destroyed in the war. The economy of these countries was raised with the help of the US Marshall plan.
On the other hand, China, with the revolution led by Mao Tsetung, had begun a major breakthrough in healing the wounds of the war, building its infrastructure and training its manpower. However, it was a poor country in economic plan.
These force relations, which express the superiority of the United States in the economic and military spheres, also explain Washington’s initiative and aggressive policy at that time.
The superiority of forces after the war provided opportunities for the United States to pursue “containment” and “forcing withdrawal” policies. As a result of this, the “Cold War” left its mark on East-West relations. The United States is waging a war against various countries, as in Korea, taking its allies behind it, landing in Cuba, waging a war against Vietnam. Coups could be staged in various countries. The monetary source of all these wars and coups was the ability of printing dollars.
The reign of the dollar was established on the basis of these economic and military force relations. We see that the Borrowing Policy of the US was an important tool in this process. after the 1970s when developing countries were in need of borrowing. Especially due to the excessive rise in commodity prices and deceleration of demand, the external debts of developing countries quadrupled between 1970 and 1980. The borrowing trend in question has been very effective in using the dollar as a reserve currency.[3] As of the end of 2017, the total amount the receivables of the United States from the countries of the world was approximately 9.5 trillion dollars.[4] Considering that the monetary base of the FED was $ 4.5 trillion in the same period, it is better understood why countries that owe money to the United States have to keep dollar reserves.
After the 1980s, the United States imposed on the whole world, especially in the 1990s, during the process it called “globalization”, the unbacked money she printed as foreign debt. Flexible exchange regimes, Central Bank “independence”, the setting of banking standards and the “opening” of capital markets have greatly contributed to the hegemony of the dollar. Indebted countries had great difficulty controlling both their national money and capital markets.
I.II. End of Bretton Woods system
The United States gradually lost superiority in the process, which continued until the early 1970s. Between 1951 and 1979, the growth rate of the Soviet Union in some of the most important branches of the economy was twice as high as that of the United States. The average annual growth rate of the national income of the Soviet Union was 7.6 percent, while that of the United States remained at only 3.5 percent. In the value of industrial production, the Soviet Union’s rate of development was 8.9 percent, compared to the United States’ rate of development of only 4.3 percent. Invest in development to produce investment goods, the difference between the rates was even more striking: 8,4 percent in the Soviet Union and 2,7 in the USA. Even in terms of labour productivity, which would later become one of the most serious problems for the Soviet Union, the annual rate of development of the Soviet Union was more than twice as high as in the United States: 6,5 percent versus 3,1 percent, respectively.
Annual growth rates of the USA and the USSR 1951-1979 (%)
SU | USA | |
National Income | 7,6 | 3,5 |
Industry Production | 8,9 | 4,3 |
Investing in the production of investment products | 8,4 | 2,7 |
Productivity of labor | 6,5 | 3,1 |
The relations of forces in the military field, on the other hand, have changed at a greater pace. The Soviet Union took giant steps forward and caught up with the United States in the early 1970s. The conventional armed forces of the Soviets had surpassed the United States. The landscape that emerged numerically in the field of strategic nuclear weapons in the early 1970s was the same. The race in the field of the quality of nuclear weapons was especially seen in hit safety, mobilization capability, and the development of MIRVs. The Soviet Union has also made significant progress in these issues.
Covering the expenses of the US armed intervention in Vietnam, which began in 1963, had placed heavy burdens on the US economy. The solution to the budget deficit was to print dollars. Thus, the equality of 1 ounce of gold = 35 dollars, which was determined in 1944, was broken. Then, many countries started buying gold by bringing dollars to the US Central Bank FED. The Nixon administration severed the connection between the dollar and gold in 1971. Bretton Woods was over.
By the mid-1970s, the Vietnam War had ended in defeat. The US occupation and control in Indochina has ended. The last colonies in Africa, such as Angola, Mozambique, Guinea-Bissau, Zimbabwe, were also liberated. The American fascist dictatorships in Spain and Portugal were destroyed. In addition to the rise of the Soviet Union, the increasing weight of the People’s Republic of China and other Third World countries forced the United States to retreat to defence.
In this process, the claims of the US “world gendarmerie” were seriously damaged. On March 16, 1973, European countries left their currencies, which were tied to the dollar at a fixed exchange rate, floating at the Bretton Woods Conference in 1944. As our friend Mustafa Pamukoğlu has determined, this event “meant the end of the Bretton Woods system. Since this date, the modern monetary system has come into operation. Provided that the conditions set by the IMF in 1976 are complied with, any country has become free to implement the monetary system it wishes.”[5]
I.III. 1975-1980: Rapid progress of the Soviet Union and the state of equilibrium
The main feature of the post-1975 period is that the Soviet Union seized the initiative and spread to new areas one after the other. The United States had fallen into great difficulties, which culminated in the defeat of Vietnam. The Soviet Union was now able to implement a policy of expansion, especially based on its developing military power. The Soviet invasion of Afghanistan in 1980 was the last stop of this spread. Power relations in the world had reached a tender point where it would not be tolerated for the SU to acquire new springboards. The United States was entering a period of consolidating its power with the Reagan administration, fighting tooth to tooth wherever the Soviet Union attacked, and counterattacking if it found the opportunity. Thus, the “softening” of the early 1970s was being replaced by a period of tension and conflict.
The curtain of a critical period was opening in the 1980s. The Soviet Union was an economically poor super-state compared to its competitor. He relied mainly on his military forces. According to Soviet statistics, the Soviet Union’s national income was 67 percent that of the United States in the mid-1980s. This ratio increased to 80 percent in the value of industrial goods production. According to some Western sources, the national income of the Soviet Union was only half that of the United States. The rate given by other sources was lower. For example, Werner Obst stated that the gross national production of the United States in 1986 was $ 4,200 billion, while the Soviet Union remained at $ 1,230 billion.[6] The difference between the rates is about 30 percent. Chinese sources stated that the Soviet Union often overestimated its own economic strength, while the West tended to portray the Soviet Union’s economy as weaker than it was.[7]
When it came to military power relations, both super-states tended to make their opponents look stronger than they were. If we evaluate various sources together:
In terms of conventional forces, the Soviet Union had gained superiority in numbers in areas such as tanks, armoured vehicles, artillery, warships and combat aircraft. In contrast, the United States outweighed the Soviet Union in anti-tank weapons. In terms of the quality of conventional weapons, both sides had superior and weak sides. In terms of the functional ability of aircraft and large surface warships, the United States was ahead of the Soviet Union.
In strategic nuclear weapons, the Soviet Union made a breakthrough in the number of missiles and strategic weapons as a whole. In contrast, the US had more titles, more MIRVs and long-range bombers.
In total, it was found that the US weapons were of better quality. The hit safety and guidance technique of the missiles of the Soviet Union, on the other hand, the functional capability of the bombers, were inferior to those of the United States. In summary, the qualitative superiority of the USA was seen against the quantitative superiority of the Soviet Union. In general, we were talking about a state of equilibrium.
In the nuclear weapons deployed in Europe, the Soviet Union achieved a noticeable superiority qualitatively and quantitatively by basing the SS-20 missiles with three headed and the “’Backfire”’ bombers in the mid-1970s. After 1983, the United States moved to establish a balance against them by placing Pershing-II and Cruise missiles in Europe.
In long-range air and sea transportation, the United States had a greater capacity than the Soviet Union. The United States had a large network of naval and air bases around the world. However, due to the width of the front line and the large distances between these bases, there were supply problems for the US. The favourable position of the Soviet Union, on the other hand, was that the distance between its targets and the epicentre was relatively closer. The difference between the two super-states in their strategic carrying capacity was thus turning back into a state of equilibrium due to their location.
When all the elements were reviewed together, in the 1980s, it was accepted that there was a stalemate situation between the military forces of the two super-states, in which one could not defeat the other.
I.IV. Force relations towards the 2000s
The Soviet economy was facing great difficulties in footing the bill for maintaining this “stalemate” situation in the military field. In addition, at that time, when a correct estimate was made of the world of the 1990s and 2000s, the necessity of making fundamental changes in the SU’s military expenditures and foreign policy was emerging.
The growth rate of the Soviet Union’s economy, which was approaching zero, was now lagging behind the growth in the US economy, the course of which did not look bright. In this case, the Soviet economy had difficulty developing new and modern offensive and defensive systems to maintain military competition. However, now the point at which the competition for military superiority had been knotted was to establish offensive systems that could not be resisted or defensive systems that would neutralize the attack of the other side.
Undoubtedly, the rulers of the Soviet Union also determined that the USSR had reached a critical point in the arms race. The Soviet economy had reached a limit in this regard. Since the beginning of the 1970s, the Soviet Union’s military expenditures had been increasing by 4-5 percent, the same rate as its economy. During this period, military expenditures amounted to 12-14 percent of gross social production. It had become so difficult that it was now impossible to continue at this speed. Since the pace of economic development was declining, maintaining military expenses required a reduction in savings and consumption. However, there was already a shortage of consumer goods in the Soviet Union. Armament to the detriment of the economy of society played a role that increased the internal difficulties of the Soviet Union. Continuing the arms race at the same pace would lead the SU to financial exhaustion.
Under these conditions, the right-wing forces in the United States have put their goal in front of them to restore the former superiority and become the number one state in the world again. This goal found its expression in the domestic and foreign policy of the Reagan government. The increase in military expenses during the Reagan era was connected with this goal. Thus, the Soviet Union would be forced to increase its military expenses, and the already weak Soviet economy would be destroyed. However, this policy has also created great difficulties for the US economy. Despite Reagan’s promises, the US economy had not turned the corner. Conversely, borrowing reached $100 billion in 1983. The annual budget deficit has reached $ 100 billion and the number of unemployed has reached 10 million. These difficulties forced Reagan to make cuts in the armament program. Thus, new possibilities of reconciliation on disarmament between the two super-states were emerging. The difficulties of the US economy also gave the Soviet Union a chance to move towards reforms under Gorbachev.
I.V. New foci of force
In the world that progressed to the 2000s, the decline in the economic growth rates of the United States and the Soviet Union caused their share in the world economy to decrease. In turn, new great foci of force were appearing in the world. We can determine how these foci of force, their share in the world economy, have followed a course since the 1970s by looking at the figures quoted by Chinese sources from the Western press:[8]
1970 | 1980 | 1990 | |
USA | 26,7 | 24,4 | 22 |
Soviet Union | 13,2 | 9,8 | 8 |
Western Europe | 25,7 | 28,2 | 28 |
Japan | 7,4 | 10,6 | 13 |
Developing Countries | 14,2 | 14,7 | 16 |
The numbers given by Werner Obst, an expert on Eastern economies who once worked as a central planning manager in the German Democratic Republic, were different. In 1986, the shares of various countries in world production were listed as follows:[9]
Country | Percent |
USA | 30 |
European Community (ET) | 25 |
Japan | 14 |
Soviet Union | 8 |
Others | 23 |
Obst shows the relationship of the four major economic powers in a tabular form:[10]
USA(percent) | People’s Republic of China(percent) | |
1990 | 26,32 | (not in the Top Ten, below 2 percent) |
2000 | 30,78 | 4,09 |
2010 | 22,78 | 9,25 |
2016 | 24,78 | 14,75 |
2017 | 24,08 | 15,14 |
2019 | 15,11 | 19,25 |
Among the five major economies, the production shares of the USA and the SU were falling compared to Japan, Europe and China. From the point of view of the USA after 1980, there was an unreal rise due to the appreciation of the dollar, while the downward trend of the SU continued.
I.VI. The place of the US economy in the world over the past 30 years
In the 30-year period from 1990 to 2020, the share of the US economy in the world economy as purchasing parity, in comparison with the Chinese Economy, is as follows:
The share of the United States in gross national product in 2019 is 22 percent. However, this share also represents a serious decline compared to the 1950s.
As can be seen, the share of the US economy in the world has decreased from 50 percent in 1950 to 26 percent in 1990 and to 15 percent in 2019.[11]
The USA is no longer the greatest power of the world economy, it has lost its place to China. When the dollar reign was established, the United States was producing half of the world’s production. Today it has fallen below one in six. This is the economic explanation of the collapse of the dollar reign in this decline.
I.VII. The share of the USA in the world economy after ten years
Now, we look at the coming years: is there a possibility of recovery in this fall of the United States? Just as it is not possible, the United States is losing its second position and falling behind India. It is clear that the United States, whose position in the world economy is moving towards the third place, does not have the opportunity to continue the reign of the dollar.
According to the reflection made by the London-based international bank called Standard Chartered, the top 10 countries of the world economy in 2030 are listed as follows:
I.VIII. The competition of the euro
The views that ”the world is in dollarization” do not correspond to reality. Today, the dominance of the dollar in world markets is being shaken. Let’s start with the dollar’s allies within the imperialist-capitalist system. The euro has emerged as a competitor to the dollar and competes with the dollar in international markets.
The euro is the second reserve currency used in the world after the dollar. While the US dollar is 61 percent, the euro is around 21 percent.
The decline in the dollar’s retention rate as a reserve from 70 percent in the early 2000s to 61 percent shows us that debtor countries are moving to reserve currency diversification and the dollar is losing blood.[12]
I.IX. The rise of the trend of trading with national currencies
The tendency to trade with national currencies is strengthening against the rule of the dollar all over the world. Many countries, especially China, Russia, Iran, Türkiye are abandoning the dollar in the trade between them and are turning to exchange with national currencies.
China, which is the first trading partner of all countries in the world, is pushing the dollar aside and developing trade with the yuan. China is the world’s largest crude oil importer with oil imports of $238.7 billion in 2019. China pays with yuan to the countries from which it buys oil. The country that sells oil also imports from China with yuan. According to the agreement concluded, these countries can exchange the yuan they have for gold if they want. China launched its first long-term Petro-yuan contract on March 26, 2018. This was a very important option for Russia, Venezuela and Iran, which sell oil to China. This was the main reason for the customs wars initiated by the United States against China.[13]
I.X. Turning to the gold reserve
Practices are spreading all over the world in the direction of converting dollar reserves into gold. That is why gold prices are rising.
You will find extensive information in Hakan Topkurulu’s article in this issue of Teori. In the 2019 World Gold Council report, it is stated that the Central Bank of the Republic of Türkiye is at the forefront with the purchase of 159 tons of gold among the world’s central banks. The Russian Central Bank, on the other hand, ranks 2nd with 158 tons.
Those who have been buying gold in the world in recent years are the countries of Asia such as China, India, Russia and Türkiye, which are the leaders of the world economy. Private funds and banks around the world have also turned to the purchase of precious metals such as gold and silver, and they pay special attention to accumulating precious metals.
There are four countries participating in the Belt and Road Project (BRP) in the top ten of the world gold reserves ranking. According to the information provided by my friend Serhat Latifoglu, the cumulative financial expert, the gold reserves calculated as 9,617 tons in the countries of the Belt and Road Project are about 30 percent of the total gold reserves in the world.
After the 2008 crisis, many Eurasian countries, especially Türkiye, Russia and China, greatly increased their gold reserves. If we look at the changes in the gold reserves of the BRP countries ranked in the top 20 between 2008 and 2020:
Russia from 520 tons to 2,299 tons (4.4 times),
China from 600 tons to 1,948 tons (3 times),
India from 358 tons to 635 tons (1.8 times),
Türkiye from 116 tons to 485 tons (4.2 times),
Kazakhstan from 67 tons to 388 tons (5.8 times),
Uzbekistan from 0 ton to 338 tons, as they reached.[14]
With this effective increase in gold reserves, the BRP countries have gained a strong position in creating an alternative currency and in world currency discussions.
Turning to gold is an escape from the dollar in the other direction.
I.XI. The inflated dollar bubble has almost burst
The abandonment of the gold monetary standard by the United States in 1971 paved the way for cheats in the financial and economic field. The Debt-to-GDP ratio of the United States was reduced from 120 percent after 1945 to 30 percent in 1975. In this process, real wages and interest rates were kept below inflation, and the debt was dissolved on paper over a thirty-year period. But this time, starting from 1969, the scourge of inflation engulfed the United States, and the interest-inflation game became inoperable after 1980. On top of this, money printing policies gained momentum under various names.
While the US stock markets were originally established to provide additional resources to companies, they have been turned into casinos in a sense with the abolition of the gold standard. Prices have reached 155 percent of GDP in 2019 from 35 percent of GDP in 1974 due to the impact of printed money and artificial transactions. Today, the US GDP is $ 21.4 trillion, but the size of the stock markets is $ 37.7 trillion.
In addition, the total size of the US bond markets is 42.7 trillion dollars. Taking into account that $ 42.9 trillion of shares were pledged and borrowed, we reach a total debt size of $ 85.6 trillion, which indicates that the United States is in a debt swamp of 4 times its GDP![15]
The size of the world’s derivatives markets is around 640 trillion dollars in total in 2019. Considering that about 40 percent of these markets are on the US side, we see that the US economy holds a virtual asset worth $ 256 trillion in addition to the debts listed above, and it still cannot liquidate these assets after the October 2008 crisis! As a result, despite all the money printed after the 2008 crisis, a thousand and one kinds of borrowing and financial games, the US economy somehow could not grow at the desired pace. Financial markets are a medium where they reflect the crises caused by the constantly falling productivity, profitability rates and bankrupt economies of the United States, and they continue to be enlarged with hormones.
Hakan Topkurulu describes the inflation of the dollar bubble in his column in Aydınlık based on the data. the USA, which was content with 900 billion dollars until 2008, increased the asset size of the FED (US Central Bank) to 4 trillion dollars by 2015 starting from the mortgage crisis. Just when they were starting to recall their money, the system could not handle it. September 2019 marked the beginning of the second crisis. They are printing so many dollars that the $ 2.3 trillion they printed a month ago is over. Now there is talk that another 6-10 trillion dollars will be printed.[16]
The US is inflating the dollar reign bubble. Soon the bubble will have burst and deflated, leaving it in the hands of Washington executives and Pentagon staffs.
II. LOST DEVICE: ARMED SUPERIORITY
II.I. The armed state apparatus of the tribute system
The reign of the dollar is a system of tribute. The sine qua non of the tribute system is the superior armed state position of the United States. Here is the mystery of the dollar reign. The United States established the reign of the dollar with its superior armed power, including nuclear weapons, after the World War II. The Atlantic Pact, which is also the pressure device of the United States on NATO members, is one of the most important instruments of the dollar’s reign. In addition to its own armed forces, the United States has imposed the rule of the dollar on the whole world, including its own allies, through NATO.
The spread of US bonds and paper all over the world is also one of the main tools of the dollar reign.
The fact that the dollar has an exchange value on a global scale cannot be called an “unfair gain”. Unfair profit is obtained in economic processes. However, the dollar reign is a tribute system based on the armed forces of the imperialist hegemony.
The reign of the dollar arose during the period of decay of the imperialist system. The confiscation of resources through exchange for dollars cannot be explained within the “exploitation” relations of capitalism. Because under capitalism, exploitation is the product of economic necessity. In other words, the worker has to work in order not to go hungry. In the reign of the dollar, it is not economical force, it is the bare force. Even this bare force is not the bare force seen in the confiscation of the farmer’s surplus product in the Middle Ages. Because just as there is no capitalist-worker relationship in the dollar system, there is no landlord-farmer relationship either. The dollar system is a system of robbery that the hegemonic US imperialism has established on all the countries and peoples of the world. In this system, the values produced by the workers of the world are confiscated based on force through exchange with dollars.
Humanity has come face to face with a system that can also be described as a hindrance or fetter from the point of view of capitalism. Because in the tribute system, free competition, which constitutes the progressive nature of capitalism, has been liquidated. Because the change of equivalents, which form the basis for the distribution of resources according to efficiency, has been eliminated based on force.
The exchange of equivalents is the basis of competition. There is only one way to excel in the competition: to reduce the cost of labour! This also happens by increasing the productivity of the workforce. The exchange of equivalents forces the entrepreneur to raise productivity, thereby improving technology and igniting new inventions.
The system of exploitation of capitalism is the exploitation of the wage worker. Products are changed according to the average amount of social labour required for their production. But labour does not change with its equivalent. A surplus value remains in the hands of the owner of the capital. We call it profit. The capitalist form of exploitation is profit.
In the tribute system of the dollar reign, the confiscated values are different from the profit. The system of tribute is not the capitalist system of exploitation that we call profit, it is a system of robbery, a system of plunder.
In feudal or capitalist systems of exploitation, the surplus labour of the peasant attached to the land or worker is confiscated. Exploitation is achieved in the production process.
The dollars printed with paper, green ink and printing expenses are being replaced with products. The capitalist Law of Exchange with Equivalents does not apply in this relationship, in other words, there is no free market. There is bullying. The bandit puts her weapon on the temple of the earth and confiscates the products. The dollar she gives you, as a use value, can at least be used to burn it on the stove or wipe your nose. But the products you give in return contain use value.
II.II. Countries that pay tribute to the United States by buying securities and bonds
In the reign of the dollar, not only the countries that exchange with the dollar, but also the countries that reserve dollars, buy and store US bonds, pay tribute to the United States. For example, countries such as Japan, the People’s Republic of China, the United Kingdom, Ireland, Brazil, Luxembourg, Hong Kong, Switzerland, the Cayman Islands, Belgium and Taiwan are paying tribute to US imperialism by buying US treasury securities. The ranking of these countries and the value of the securities and bonds they hold are shown in the table below.[17]
Countries holding bonds and bills issued by the US Treasury (March 2020) | ||||
Country | Billion Dollars | Change within one year from March 2019 | ||
Japan | 1,217.7 | 18% | ||
China | 1,081.6 | -3% | ||
United Kingdom | 395.3 | 25% | ||
Ireland | 271.5 | -2% | ||
Bazil | 264.4 | -15% | ||
Luxembourg | 246.1 | 7% | ||
Hong Kong | 245.3 | 17% | ||
Switzerland | 244.6 | 8% | ||
Cayman Islands | 207.2 | -6% | ||
Belgium | 206.1 | 10% | ||
Taiwan | 205 | 21% |
The fact that the People’s Republic of China reserves a large amount of US dollars and securities gives rise to various interpretations. China is following the policy of peacefully draw ahead the US. Thus, US aggression is calmed down and armed confrontations are prevented or postponed. “Let’s pay tribute to the bully so that she doesn’t smash the glass, the frame of our shop”: this is the logic of China’s strategy to peacefully draw ahead the US!
The United States is financing its foreign trade deficit by printing dollars.
The United States operates its war machine by printing dollars.
The United States is plotting coups and waging wars by printing dollars.
The USA is not a human being in this system, but a bear. Because when a person takes honey, he does not break the apiary, because he will take honey from that hive again in the future. But the bear breaks the apiary to eat the honey.
Under the reign of the dollar, US imperialism completely disintegrates the System of Exchange of Equivalents or the market system and undermines production, in a sense dispersing capitalist production relations.
In a world where the dollar reigns, there is no talk of a free market and competition. This system is the most extreme point reached in the liquidation of the free market system during the period of imperialism. For this reason, the reign of the dollar is a drawback even from the point of view of capitalism, it is the shackle that binds the feet of capitalist production.
The reign of the dollar is, in the final analysis, a shackle even from the point of view of the US economy. Because it confiscates resources not in capitalist relations, but through bullying. In this case, the US economy has become mafiosed, disconnected from production and turned into a robbery system. Under these conditions, there will be no development on the basis of the capitalist system, and bankruptcy is inevitable. And here, the stop is reached.
II.III. The US war machine is losing its threat capability
The destruction of the reign of the dollar is not only the result of economic-financial processes, but in connection with this, and even more importantly, the formation of armed state forces that balance the US military apparatus. Yes, the bandit is armed, but large armed resistance positions have formed, balancing the bandit’s threat. These are states ranging from China and Russia to Türkiye and Iran.
We learn from the articles of Mehmet Perinçek: In numerous assessments made by the US armed forces and strategy institutions, it has been determined that the US will not win the next world war. In the face of the alliance of China and Russia, the United States is losing.[18] The armed tyranny of the United States is being defeated and withdrawn in all climates of the world:
- The resistance of Syria and Iraq,
- The success of the Turkish Army against US pawns and coup attempts,
- The defeat of the Second Israeli Plan of the USA under the name of “Kurdistan” by the countries of Western Asia,
- The determination shown by the cooperation of Türkiye, Libya and Russia in the Eastern Mediterranean against the threats of the United States and Israel,
- China’s and the Democratic People’s Republic of Korea’s challenges to the US armed threat in the Pacific,
- European attempts to create a separate army from the United States,
- Effective armed forces of Russia against the United States,
- The fact that Latin American countries, especially Venezuela, neutralized the US coups.
In summary, the teeth of the USA are falling out, of course, not spontaneously. The Developing and Oppressed World States, including Türkiye, and even the European allies of the United States are defeating the armed power of the United States beyond balancing. This means that the bandit is old. Now the frightening effect has weakened, and the dollar is not enough to keep its reign afloat. To summarize: the military power on which the dollar reign is based is losing its ability to threaten and pressure.
II.IV. The main power of the struggle against the reign of the dollar: the states
The main power of the struggle against the rule of the dollar is the states. Theories that do not take into account the states are invalid in the process we are living in. We are looking at the world today:
- States such as China, Russia, Türkiye, Iran, Venezuela are taking the lead in the struggle against the rule of the dollar.
- The great powers consisting of states such as the Shanghai Cooperation Organization and the BRICS (Brazil, Russia, India, China, South Africa) have formed a serious weight against the reign of the dollar.
- Great states such as Germany and France, which are the leaders of the European Union, and even the UK and Australia, you will be surprised, have turned their direction to Asia and are included in the bloc against the rule of the dollar.
There is nothing unusual about the resistance of the states to the rule of the dollar and the Unipolar World Plan of the USA. Lenin, in his 1916 work A Caricature of Marxism and Imperialist Economism, explained that the maximum exploitative tendency of imperialism is to destroy states.[19]
The customs of the states, the State Economic Institutions, the support of agriculture, the national currency, the social aid institutions and the like limit the imperialist exploitation. That is why imperialism cannot tolerate semi-colonies either. It is the ultimate goal of imperialism to colonialize the nations, to leave them without states. Since, the removal of the states eliminates the limits of imperialist exploitation.
During the World War I, there were three countries that were in a semi-colonial state: China, Iran and Türkiye. They were also under the threat of colonization. However, humanity has faced this threat with the Russian Revolution, the Turkish Revolution, the Iranian and Chinese revolutions, and the Era of Revolutions of the 20th century has opened. With the revolutions and liberation wars after the World War II, all peoples had their states and limited imperialist exploitation.
When Deng Sioping explained Mao’s Three Worlds Theory from the United Nations podium in 1974, he listed the three factors summarizing the world situation as follows: “States want independence, nations want liberation, peoples want revolution.“ The fact that states are acting as one here is in accordance with the world reality of that day and today, and in fact is a continuation and confirmation of the analysis in Lenin’s book “A Caricature of Marxism and Imperialist Economism”.
The threat of being left stateless came up again in the 1990s. With the collapse of the Soviet Union, the United States tried to liquidate the nation-states in order to become the sole master of the world. However, she met with great resistance, and the Multipolar World process began.
The Multipolar World is the program of resistance against hegemonies and at the same time the struggle against the reign of the dollar. Under these conditions, economist theories that do not want to see imperialism as an armed state have been reintroduced. Imperialism, as Lenin also identified, is a site of armed competition of more than one state for world hegemony. The main force of resistance to imperialism and hegemony is the Developing States, the Oppressed World States and the states of developed capitalist countries that have not surrendered to the US attempt at World Domination. Today, in the fight against the reign of the dollar, we see that this practice is taking place.
Trans-national companies do not disrupt this positioning. Because trans-national companies are not organized into a state, but are mainly led by US capital and are under the power of the US State. There is no State of Trans-national Companies separate from the United States. Trans-national companies do not have nuclear weapons, aircraft carriers, missiles, air force and ground forces. For this reason, trans-national companies do not have an impact that decays the reign of the dollar, they have a weight among the pillars of the reign of the dollar. Because they are both within the forces on which the US State relies and within the forces that use the US State.
III. THE THRONE OF THE DOLLAR IS COLLAPSING
III.I. The bandit will not rule the world
The throne of the dollar reign is falling down. The coronavirus pandemic has accelerated this process.
The nature of the reserve currency of the dollar, which has taken the lead in reserve money since the 1950s, is being discussed with the loss of leadership in the world economy and the increasingly deepening financial crises. This situation resembles the British pound, which was used as the strongest reserve currency in 1914. Between 1941 and 1944, sterling was the most widely used reserve currency, but the gold standard frequently changed due to factors such as rising inflation and balance of payments crises. Despite all this, the sterling maintained its reserve currency position until the Bretton Woods Agreement of 1944. Although the sterling has lost its strength, the reserve currency position came until the 1950s.
What happens to the pound now happens to the dollar. The dollar is still an important reserve currency, but this is a deceptive appearance, because economic data show us that the United States is losing strength.
Imperialism’s own institutions, especially the IMF, began to discuss the design of a new currency, including the Chinese yuan, or the return to a flexible gold monetary standard.[20]
In both scenarios, the dollar will lose its basic reserve quality.
The reign of the dollar was established in the conditions when the USA was the largest economy in the world. However, now the United States is being dragged into a very deep depression.
The unemployment rate in the US in April 2020 is at the highest level in the last 12 years. The unemployment rate in March was 4,4, it jumped to 14.7 percent in April. It is estimated that this rate will rise much higher in the coming months.
The Mafia-Gladio-Dollar system of the US imperialism has entered a period of collapse. The system that is collapsing is not capitalism; it is the hegemony of the imperialist system in the last period and the dictatorship of financial capital.
The share of the United States, which produced 50 percent of the world economy in the 1950s, has fallen to 15 percent today. The extraordinary rise of China has put an end to the position of the United States in the world economy.
If we look ahead, the situation does not look bright from the point of view of the United States. In the world economy in 2030, China is in the first position with 64 trillion dollars, India is in the second position with 46 trillion dollars, the USA is in the third position with 31 trillion dollars. The countries that followed are Asian, African and Latin American countries such as Indonesia, Türkiye, Brazil, Egypt and Russia, respectively. Japan and Germany are the last of the top ten countries.
A new world is being built. So, how can we describe the New World, what is happening and will happen?
First of all, we should note the following: there is no agenda in front of humanity and Türkiye that will completely liquidate capitalist private property immediately at the first stage, but we have come to the end of hegemony and the reign of the dollar.
On the ideological aspect, however, liberalism of all kinds is falling into disrepute, and the false democracy of the imperialist West is losing all its claims. Humanity is on the verge of a public, sharing, populist, enlightened and revolutionary civilization; it is entering the Era of Asian Civilization.
III.II. Twins of the old age: hegemony and the reign of the dollar
Hegemony and the reign of the dollar are the two pillars of the current imperialist capitalist system.
Hegemony is the control and domination established by the US imperialism not only over the Oppressed and Developing World, but also over the developed countries of capitalism. The claim of the US super-state to world domination is called hegemony. The program called the Unipolar World or Globalization was the goal of US hegemony. The ideology of the USA’s claim to World Domination is neo-libealism and postmodernism.
The reign of the dollar is the institutionalization of hegemony in the financial sphere. After 1945, the US imperialism, wearing Hitler’s boots, built the reign of the dollar and at the same time established a system of tribute and domination over other developed capitalist countries of the world.
III.III. Paper tiger
If we evaluate it in total, we have come to the end of the 75-year tribute system of the USA.
The reign of the dollar is, as our waste National Anthem says, “A beast with a tooth left”.
Mao Tsetung’s theory of the “Paper Tiger” manifests itself in the practice experienced today. The dollar was covered, but now it can be seen that it is covered with a paper one.
How well the folk song says: a bandit will not rule the world.
The collapse of the dollar-based financial system ignites the process of establishing regional monetary and banking systems.
III.IV. The heir to the reign
All the important circles that follow the process we are going through are seeing the end of the dollar. You can read examples from the articles of Hakan Topkurulu and Mehmet Perinçek.
There is a consensus on a global scale that the reign of the dollar is being destroyed. However, the question of which currency will replace the dollar is obvious. Since world trade will continue, there will be new means of exchange. Various options are being discussed at the moment.
The People’s Republic of China, which has settled on the throne of the world’s first economy, is undoubtedly an important weight. However, China does not have a claim to establish the yuan reign instead of the dollar reign. We are not in the conditions of the year 1944. There is no state claiming to establish hegemony in the world today. For one thing, there is no superior economic power to support this claim, and again, there is no armed state that will subjugate everyone. The Multipolar World process excludes the possibility of establishing the reign of one of the leading economies. The Chinese administration both sees this fact and is establishing a network of relations with the countries of the world, which it calls “development by sharing”. The Belt and Road Project is also within this scope.
Mao Tsetung’s 1974 address to the countries of the world through the mouth of Deng Sioping is also echoed today by Chinese Minister of State Xi Jinping: “China will never pursue hegemony. If China tries to establish hegemony, all the countries of the world should unite and destroy China’s hegemony.”
The assurance of this promise of the People’s Republic of China is that it resists on the path of socialism. If China goes down the path of capitalism, there will be no guarantee of this promise.
China is not pursuing a policy aimed at the reign of the yuan, it is taking steps to improve exchange systems with national currencies and limit the reign of the dollar. The proposal to create a Eurasian Bank and Eurasian Currency is gaining strength.
III.V. The end of the seigniorage right
The most important question is: who will have the “seigniorage right” to the new currency that will be the medium of exchange in the world?
This question is the question of those who are left behind under the shadow of the dollar reign period.
Prejudices that the new medium of exchange will bring a new tribute system are obsessions left over from the past.
Goods are exchanged for goods, and currency is a means of exchange. This theory, which explains money, also forms the basis for ending the “seigniorage right”. The balances in the world do not allow the existence of a bully who collects tribute in exchange processes.
It is possible to establish bully-free systems that will be a means of change, and development will also be in this direction. Because there is no master of the process taking place. The development in the direction of the Multipolar World also determines the masterlessness of the medium of change.
We have not come to the end of capitalism, but we have come to the end of the tribute system formed by the last period of imperialism.
Capitalism was not a tribute system during the revolutionary period. Capitalism had introduced the distribution of resources according to efficiency. The reign of the dollar was established in the conditions of decay of the monopolistic period of imperialism. While the US economy was being dragged into the Mafia-Gladio dictatorship under the management of the financial oligarchy, it created similar structures in the Atlantic countries affiliated to it.
Now our world is on the verge of a new revolutionary wave, even at the beginning. The most powerful revolutionary breakthrough of the Era of National Democratic Revolutions and Opening Up to Socialism is on the agenda of humanity. The emerging Asian Civilization is the pioneer of this era, it is a modern civilization. There is no basis for the reign of the dollar or any other reign in Asian civilization. Asian civilization includes the independence of national states, public administration, planned economies focused on production and employment, the rise of labour values, enlightenment and secularism, development by sharing in international relations and respect for independence.
IV. WHERE IS THE US POLITICAL SYSTEM GOING?
IV.I. The revolution prevents war
How will the bankruptcy of the Unipolar World Project, the end of hegemony and the collapse of the dollar reign affect the US political regime?
Some people believe that the United States will respond to this process with a world war. In connection with this, some claim that a fascist regime will be established in the United States.
The options that such critical processes put in front of humanity are obvious: either revolution prevents war, or war leads to revolution.
Today we are living a process in which the revolution prevents war. The struggle of the world states against hegemony and the reign of the dollar is rising.
The United States is not a rising imperialist, but a descending imperialist. As is known, the world wars were started by the imperialists, who rose up with the demand for re-sharing.
The claims that the United States will start a world war in the face of the impasse it has entered are not valid. Today’s USA is not like Hitler’s Germany before the World War II. Hitler started the war by taking strength from a great economic rise and an unrivalled armed force. If he had known to stop, he would have made very important gains. The United States, on the other hand, is not a rising economy, but a descending one, and it is an armed power. She does not run from victory to victory like Hitler, she goes from defeat to defeat. There are great forces against the USA. We also read all these facts from the US security reports. Those reports begin with “we have been defeated.” Under these conditions, it cannot be expected that the United States will take initiatives that will lead to world war. The United States is a great state, understands costs and benefits, and does not start a world war, knowing that she will lose.
Regional wars are different. The United States may also wage regional wars or wars against certain countries from now on, but it cannot afford for these wars to turn into a world war.
Mehmet Perinçek summarized that the political and military staffs of the United States are working on various war scenarios.[21] The United States is being defeated against Russia and China in all of these scenarios. The United States loses all non-nuclear wars. In a nuclear war, on the other hand, the parties have no choice but destruction. When the danger of nuclear war was rising in the early 1960s, a US general said, “If there will be two Americans and one Russian left at the end of this war, we should get into that war.” The question he was asked was as follows: “Is there a guarantee that one of these two Americans will be a man and the other a woman?”
We can say that there is no possibility of a world war in the face of the fall of the United States and the weight of competing states.
We are living through a process in which the revolution prevents war.
IV.II. The possible option in front of the USA:
Relative return to traditional democracy
Will the overthrow of hegemony and the reign of the dollar lead to a fascist dictatorship in the USA?
The worsening crisis of the US economy will cause uprisings among the unemployed and poor sections. In the face of these uprisings, coup and fascist dictatorial tendencies may emerge. However, the overwhelming probability is that popular movements will lead to developments in the economy to meet domestic demands and in politics to revive the traditional democracy of the United States. It should be expected that the options that remind of the Roosevelt administration seen in the process leading to the World War II and turn to Keynesian economic policies will strengthen. Because the front of the hegemonic forces of the USA is closed on a global scale. The equivalent of these conditions in domestic politics is not a fascist dictatorship, but the liquidation of the mafia economy, the introduction of production-oriented programs, the expansion of the distribution base and the beginning of more participatory processes in politics.
As for Türkiye, the process by which the hegemony of the USA and the reign of the dollar were collapsed is the process of breaking its chains for Türkiye, completing the Kemalist Revolution, taking its place among the pioneers of the modern civilization rising in Eurasia.
[1] Hakan Topkurulu, “The Dollar become 7 Liras, you are still saying that the dollar will collapse”, Aydınlık, 15 May 2020. I suggest you to study the articles of our friend Topkurulu on economics published in our Aydınlık newspaper and Teori magazine carefully. He explains the processes experienced by the Turkish and US economy today with scientific data. Again, I recommend that you also review the articles of our friend Yıldırım Koç, who monitors the process we are going through based on objective facts in terms of economic data such as external debt, Central Bank reserves, balance of payments, budget deficit, employment.
[2] See: Doğu Perinçek, “Towards a Multipolar World”, Saçak, issue 39, April 1987, p. 3 and others. This article was republished in the 215th issue of our Teori journal dated December 2007. Again see; Doğu Perinçek, from Stalin’ to Gorbachev, Kaynak Publication, revised 4th edition, İstanbul, February 2010, the part “US Supremacy after the World War II” and following parts, pp.142-152.
[3] A History of Global Trade, p.24, quoted by Serhat Latifoğlu.
[4] https://www.businessinsider.com/us-debt-world-map-2017-5) and https://www.visualcapitalist.com/visualizing-debt-united-states/
[5] Mustafa Pamukoğlu, “Can the dollar be dethroned -1”, Aydınlık, 8 May 2020.
[6] Werener Obst, Süddeutsche Zeitung, 10 Aralık 1986.
[7] Xing Shugang, Li Yunhuo Liu Yingna, “Veraenderung des Kraefteverhaeltnisses zwischen der Sowjetunion und den USA”, China und die Welt-4içinde, Beijing Rundschau Yayını, Beijing 1983.
[8] Xing Shugang, Li Yunhuo Liu Yingna, ibid.
[9] Werner Obst, ibid.
[10] We also determined the rates using the figures provided by Werner Obst. We have corrected the account errors.
[11] For the tables showing the shares of the 10 largest countries in terms of purchasing parity in the world economy in the issue of our Teori journal, see Recep Erçin, “The Share of the USA in Global Income has Melted by 6 Points”.
[12] http://data.imf.org/regular.aspx?key=41175
[13] Hakan Topkurulu, “Gaddafi’s Dream Comes True”, Aydınlık, 29 April 2020.
[14] World Gold Council, 2020 Report.
[15] https://www.sifma.org/wp-content/uploads/2019/09/2019-Capital-Markets-Fact-Book-SIFMA.pdf page 15.
[16] Hakan Topkurulu, Aydınlık, 15 May 2020.
[17] This source can also be referred: https://www.statista.com/statistics/246420/major-foreign-holders-of-us-treasury-debt/
[18] Dr. Mehmet Perinçek, “Is the World War Coming”, Teori journal, issue: 365, June 2020, p.50.
[19] Lenin, A Caricature of Marxism and Imperialist Economism, translated by Veysel Yıldız, Kaynak Publications, 1st Edition, Istanbul, June 2016.
[20] https://www.imf.org/en/Publications/WP/Issues/2018/01/25/Reserve-Currency-Blocs-A-Changing-International-Monetary-System-45586.
[21] Dr. Mehmet Perinçek, “Is the World War Coming”, ibid.